LTC Insurance Keeps Some in Homes

By ALLISON BELL

Published 5/13/2011 

Private long term care (LTC) insurance helps insureds with moderate disabilities stay in their homes longer and does not appear to crowd out informal caregiving.

Yong Li, a researcher at Competitive Health Analytics Inc., Humana Inc., Louisville, Ky. (NYSE:HUM), and Gail Jensen, a gerontology and economics professor at Wayne State University, have come to that conclusion in a paper published in Inquiry, an academic journal that focuses on health care organization and finance issues.

The researchers analyzed the effects of private LTC insurance on use of LTC services by analyzing survey data from 2002 to 2008 from the University of Michigan’s Health and Retirement Study

Up till now, few other researchers have conducted formal studies on that topic, Li and Jensen report.

One advantage of using the Health and Retirement Study data is that the researchers in charge of that project use follow-up question to identify survey participants who believe they have LTC insurance but do not actually have it: Li and Jensen say confused consumers make typical LTC insurance penetration figures about 50% higher than they ought to be.

Owning private LTC insurance does appear to increase that insureds who are unable to perform two more activities of daily living (ADLs) will enter a nursing home, the researchers say.

Having LTC coverage appears to increase likelihood that those seriously disabled insured will enter a nursing home by 17% to 39%, the researchers say.

But having LTC insurance seems to have a statistically insignificant effect on the use of informal care from friends, neighbors and relatives, the researchers say.

The researchers say the same is true of home care.

In the past, some LTC insurance market watchers have suggested that relatively healthy older LTC insurance insureds might view tapping home care benefits as a way to pay for maid service.

But LTC policy insureds did not seem to be any more likely to use home care than other, similar survey participants with a moderate level of disability, and the researchers add that they found know evidence of antiselection.

After accounting for variables such as income, education level and access to adult children, LTC insurance holders seemed to be no more likely to use home care than comparable consumers without LTC coverage, the researchers say.